In the report, D.A. Davidson noted, “Q2 operating EPS of $0.24 increased 63.7% from $0.14 last year and was a penny better than our Street-matching $0.23 estimate. Net sales of $898.2 million increased 31.8% year-over-year (y/y), compared to our expectation of $866.8 million. Sales were driven by volume increases of 21.8%, primarily due to the absence of Hostess in the market, acquisition benefits of 10.9% and partially offset by unfavorable price/mix of 0.9%...The central thesis of our UNDERPERFORM is based on two thoughts. First, the gains of the past nine months will become next year's insurmountable comps. We don't believe the sales gains and margin leverage of the past nine months are sustainable given that Hostess is back in the market as of July 15th. Management disagrees, and says they will hold onto their gains – and presumably grow with the 4Q re-introduction of Hostess bread brands. Second, a valuation of 20+ times earnings is completely incompatible with a category in secular decline, as is the packaged bread business.”